Offshoring is for the greater good
Offshoring is for the greater good
On the pros and cons of hiring remote labor from another county
Before I started typing this up, I googled the word ‘offshoring’—admittedly to make sure that I would be using it in right context—and was confronted by the pattern I will highlight in this post right from the start:
A paid advertisement on the 5 cons of offshoring
Terminology that it was ‘taking advantage’ of lower costs
This experience in an unbiased search is resemblant of the response I get when I talk with others about how I often resort to farming out tasks to overseas workers.
Whether it is shown through an eye roll or a or a dismissive comment, the core message conveyed in the response is the same: ‘How dare you be participating in this form of modern slavery?’
This is one of two problems that many people have with offshoring as a tool for businesses—and the one I personally hear most often. The other is the effect that it has on job opportunities, with the concern being that offshoring is relocating job positions from one’s home country to another. I’ll address both below, starting with the latter.
Is offshoring as bad as it seems?
Popular shows like Silicon Valley have even highlighted this concept as a con. It’s a running joke that carries through the whole series from Gavin Belson’s sweatshop factory to Jian-Yang’s western rip-off operation.
I sympathize with the story of the western manufacturer who is put out of a job to a new factory in who-knows-where. On the flip side, I compare the overseas rockstars I know to the $80+/hour schlub who’s racking up hours doing nothing on the dime of a manager who doesn’t know any better and I think to myself—this person needs to have the stool kicked out from under them.
Technologically and overseas labor is the foot that kicks the stool. I thought the kick would come much sooner during the big switch to remote work through COVID, but that just seemed to have been a structural tradeoff. The articles I’ve read promoting remote work in the US cite productivity under the guise of headings like mental well being and company resilience.1 Both of these are important factors to keep in check, but aren't of themselves true productivity, nor do they seem to have netted any measurable benefit on that axis.2
That’s okay though. There’s plenty of work to go around. Offshoring helps keep the US cost and idea competitive in a global marketplace.3 It is this increase in productivity because of offshoring that gives US employers the breathing room to create trade-offs for mental health, remote work, and other distributed benefits.
Back to the story of the western manufacturer, this is a more tangible example of a harmful effect of offshoring but not a good enough argument from which to stay stagnant.
There’s a great4 new show on Netflix called The Playlist that’s about the founding of Spotify. In the 2nd episode, it’s shown how hard the music industry was being hit during the rise of Pirate Bay that created the conditions for Spotify to seize the market. The industry is loosing huge sums of money, layoffs are widespread, and no one in the space wants to hear a damn word about ‘free music’. That is, until Per Sundin, head of Sony Sweeden at the time realizes something: Spotify isn’t Pirate Bay, it’s a jukebox. Spotify built a tool that put the world’s music at the tip of your fingers. Who wouldn’t pay for that? It didn’t need to be free, it was better, and it was sexier.
Point is, there was some short term turmoil until the industry reformed around something better. We can look at the last 70 years of unemployment data and draw a modest increasing trend from a linear regression—I know that because I tried it here—but it’d be impossible to pin this to offshoring alone. 3 of the largest outlying datapoints are from spikes in unemployment during the financial crisis of the last 20 years.5
It’s not modern slavery either
When I was trying to hire my first remote employee for WAND, I asked him how much he wanted to be paid. We’d been working together on a project-by-project basis for months and I was convinced enough of his skill that I was ready to bring him in full time at an hourly rate.
He told me that he was making something like $4.70/hr at his existing job, and so $5.00/hr from me would be sufficient to incentivize him to make the leap and join our start-up.
Sold.
This is the part when I usually get the reception to offshoring that I mentioned at the start. When I do, I think to myself: this is a person who does not recognize freedom is a byproduct of economic opportunity, not an opponent to it.
By the time this developer stopped working with me, we were compensating him over $15/hour which was still a steal for us compared to a stateside rate for the same skillset. I communicated early on that I wasn’t the type to balk at a raise request when the time came because of my own experience acquiring skills faster than most superiors would increase compensation. It’s been a few years since he’s gone on to do independent work, and I frequently refer others I come across to this developer. Its for this reason I know for a fact they are now charging over $25/hour for their time since they’ve been able to show capability working on multiple other large scale projects.
This is the part of the story where folks start to drop the ‘modern slavery’ stigma. Is $25/hr, $80/hr?—no—but it is over 5x what he was making at his market rate position when we first started working together.
What employment track are you on that has the potential to 5x your base income within <5 years?
The heartfelt wrap
The reason I wanted to write this up was because recently I got a note from another talented, overseas contractor I’ve been working with for nearly 3 years. In addressing their departure for something new, they’d sent my me this:
Offshoring is not modern slavery. At its best, it can be economic liberation. I understand that there are unideal scenarios out there, and so I don’t aim to make a blanket statement about the conditions of labor being deployed from one country to another in every market, but what I do know is this:
Talented people can come from anywhere, and systems are made to be broken and changed to promote better outcomes. Any way you look at it, offshoring is a means of providing opportunity in a place where it didn’t before.
Create more opportunities than you take advantage of.
-Benjamin Anderson
Check out my recent appearance on The Hue Seth Show where I talk about Legacy, Succession Planning & Entrepreneurship.
Send me signal on Urbit: ~padlyn-sogrum
https://www.forbes.com/sites/adigaskell/2021/05/31/how-productive-have-remote-workers-been-during-covid/?sh=10553205639e
https://www.weforum.org/agenda/2022/03/productivity-dynamics-of-working-from-home/
https://link.springer.com/article/10.1007/s11747-011-0286-x
‘great’ is quantified via a 100% Rotten Tomatoes score: https://www.rottentomatoes.com/tv/the_playlist
https://docs.google.com/spreadsheets/d/10KASSW6FdCBKi9BQ5lC-K8i7xFwHsKjy21QajGWs-88/edit?usp=sharing